Question

The printout below represents a regression equation designed to

    predict the number of hamburgers consumed.

A. Give the regression equation.

B. Interpret the regression equation in terms of economic theory. In other words does the equation seem to fit economic theory? Do the signs make economic sense?

C. What about the R-Square? It seems very high, your comments on this please.

D. How many degrees of freedom are there?

E. Are you comfortable with this regression? Be sure to comment on the signs of the right hand side variables. Do they make economic sense?  

Regression Output:

R Squared 0.9959

No. of Observations 12

Coefficient Standard Error t values

Constant 176.3    1.3   135.6

Income -106.7 15.5 -6.88

Price of Hamburgers -4.5 1.8 -2.5

Price of Hotdogs -12.1 20.9 -0.579

Answer 1

a)
y^ = 176.3 - 106.7 Income -4.5 Price of Hamburger - 12.1 Price of Hotdog

b)
slope is interpreted as when we change independent variable(x) by 1 unit, on average dependent variable(y) will change by slope units
Income
income increases by 1 , number of hamburgers consumed will decrease by 106.7
This doesn't make sense , as when income increases, consumption should increases

Price of Hamburger
when price increases by 1 , number of hamburgers consumed will decrease by 4.5
this make sense

when price of hotdog icnreases by 1, hamburgers consumed will decrease by 12.1
this doesn't make sense

c)
R^2 = 0.9959

d)
df =n-k-1 = 12 - 3 -1 = 8

e)
No, as this does not make common sense